Popular earns $895.3M in ’15, $137.4M in 4Q15

Popular Inc. reported net income of $137.4 million and adjusted net income of $98.3 million for the quarter ended Dec. 31, 2015, compared to net income of $85.6 million and an adjusted net income of $93.4 million for the quarter ended Sept. 30, 2015.

For the 12-month period ended Dec. 31, 2015, the bank reported net income of $895.3 million and adjusted net income of $374.8 million.

“In 2015 we achieved several key milestones such as the Doral transactions and the completion of the restructuring of our U.S. operations,” said Popular Inc CEO Richard Carrión.

In February 2015, Popular announced the purchase of $2 billion of assets and the assumption of a similar amount of deposits from Doral Bank with subsequent acquisitions of their insurance and mortgage servicing portfolios.

“At the same time, we consistently delivered strong financial results despite the continued weakness of the Puerto Rico economy. The reinstatement of the quarterly dividend on our common stock [in September 2015] demonstrates our confidence in our capital position and our revenue generation capacity going forward,” he said.

The net income reported for the full year included “the effects of the partial recapture of our U.S. deferred tax assets,” Carrión said.

Adjusted net income from continuing operations was $375 million, improving from the prior year’s $305 million.

The bank’s non-performing assets, including covered loans of $843 million, were down from $933 million at year-end 2014. Non-covered non-performing loans decreased to $29 million from $602 million. NPLs were 2.7 percent of Popular’s total non-covered loans, compared to 3.3 percent in 2014.

“Given this privileged competitive position, we continue to focus on strengthening the relationship and satisfaction of our clients, while providing innovative solutions, as part of our digital transformation effort,” he said.

Some 600,000 of Popular’s clients are active online and 67 percent of them use mobile devices, the banking executive told analysts during an earnings call earlier in the day.

“In December, close to 30 percent of our deposit transactions in Puerto Rico were profits for ATMs and mobile devices, a figure that has been increasing consistently. Our business profile positions us well for an eventual economic recovery in the island and continues to provide meaningful earnings power in the interim,” he said.

Popular is one of several banks with exposure to the government, although most of it is in loans to municipalities and not publicly traded securities of the central government or its public corporations.

“Our underwriting process, the structure, and the size, of our Puerto Rico government exposure relative to our capital base gives us comfort. Our direct outstanding exposure is $578 million essentially flat from the previous quarter and down $233 million from last year,” Carrión said, noting the bank will “monitor developments in this portfolio closely and make future adjustments as needed.”

During the call, Carrión spoke of Puerto Rico’s liquidity challenges, saying the government will fall short to meet its debt obligations, prompting the need for immediate action.

“We continue to believe that any successful solution will require three things; one, a legal framework for a debt restructuring; two, an effective fiscal control board; and three, a meaningful economic stimulus plan,” he said. “This is a three-legged stool and we are concerned that the discussion and action to-date has not put sufficient emphasis on economic growth.”

A resolution will need by-partisan support from the Puerto Rico legislature and the community at large, as well as active participation of the U.S. government’s executive and legislature branches, he said.